Is SaaS a fit for the small business market?
I am truly amazed by the response I received on my previous post, “Is virtualization the future for small business?” There were some very enlightening responses and it appears that the subject of virtualization is a HOT topic. Reading all the great posts on my Linkedin Groups it became very apparent that my definition for virtualization was a bit incorrect and that my previous post was really speaking about a SaaS model not virtualization. Although, virtualization can be defined in a number of ways depending on who you talk to.
That being said I wanted to focus on the SaaS model in this post and how it has begun to change the landscape or level the playing field for the SOHO and small business markets. To put some context around the words small business, I define a small business as having less than 50 employees. There are a number of ways to define the small business sector and I think I will save that discussion for another post.
I have been in the SMB market all of my career, mostly in the small business sector and have always utilized technologies such as file, web, Exchange, SQL, mail servers, phone systems, ect. This technology is a must if you want to compete but the capital and human investment was always a hard pill to swallow. On one hand I knew I needed the technology but on the other hand spending the money was tough when you are bootstrapping your company’s growth.
In the early stages of a business’s life cycle taking advantage of SaaS models for the above mentioned technologies will significantly decrease your capex. A SaaS will add to your monthly expenses/overhead but in my opinion that is the lesser of two evils. For me it was easier in the early days to find hundreds of dollars per month than it was securing tens of thousands of dollars with limited revenue and no POC (proof of concept). By utilizing these services a business is able to focus and spend its limited resources on acquiring new customers building a revenue stream and developing POC.
From a purely business owners point of view, I want to be clear that in my opinion it’s always best to have your own equipment. Let’s face it having your own equipment gives you the most control and freedom. Let’s also be real and add that what we want and reality are not always the same thing so you have to do what you can to survive. Let me ask you this question. What’s more important? A) having the technology and going out of business? B) Not having the technology and going out of business? or C: Utilizing a SaaS model to get you in the game and purchase equipment when it makes financial prudent sense? I would choose C). I am simply saying that in the early stages of any business a SaaS model can help get you over the hump and give you POC without making a huge capital investment.
Sincerely,
Jason Tapolci
August 26, 2009 at 2:47 am
SAAS is a huge boon for SME’s, although not many realise it just yet. Services such as Google Apps can give a cash-starved SME much of their basic IT requirements (email, calendar, office apps, etc.) for little or no cost. But I think there are a couple of considerations:
1. Some services are more suitable than others for this type of operation. For instance, whilst the aforementioned email, calendar and office apps work pretty well (with the proviso that office apps don’t give you the full functionality of a local install), trying to use this model for more specialist apps like, say, DTP will probably be more hassle than it’s worth.
2. Using SAAS can raise the importance of having a rock-solid, high-bandwidth internet connection significantly. Most SME’s will find that costs in this area need to increase, and that a back-up solution (mobile broadband dongles for everyone perhaps) needs to be implemented too. Sometimes the costs savings of going down the SAAS route can be eaten up by comms costs, particularly in the case of rural businesses where ADSL speeds are relatively low.
To touch on VoIP, which is particularly pertinent, I favour keeping a local PBX over a Centrex or hosted approach simply because it is more resilient to internet connectivity issues. As long as you have your PBX hooked up to a PSTN/ISDN line or use a GSM gateway then you can carry on making calls if your internet connectivity fails.